Deal Breaker

Congressman Rick Renzi and the very strange coincidence

Congressman Rick Renzi was poised to push congressional legislation involving a former business partner's land  but says that he washed his hands of the deal after a lobbyist questioned their ties.

In a 45-minute telephone interview with New Times about the land proposal, Renzi sounded frequently irritated and sometimes angry. He insisted that he'd never had a conflict of interest and repeatedly questioned why the aborted deal was worth writing about.

To answer the congressman's question, this aborted land deal  the details of which came to light just weeks before the general election  is not the first time Renzi's dealings with James Sandlin have raised eyebrows. According to a Federal Elections Commission audit, it was the profits of a land sale Renzi made to Sandlin that partly funded Renzi's election in 2002.

Fred Harper

You wouldn't have to be a conspiracy theorist to question whether Renzi's support of a bill to obtain Sandlin's acreage in a congressionally sanctioned land swap was an attempt to return the favor.

Renzi insists it wasn't. But either way, it's definitely news.

Renzi, who is currently running for a third term representing a district that stretches from Flagstaff to southeast Arizona, sold off a half-interest in his real estate investment business to a fellow investor, Sandlin, just before filing to run for Congress for the first time in 2002.

Sandlin paid $200,000 cash. And within months, Renzi plowed all his profits into his congressional campaign  an infusion that allowed Renzi to outspend his opponents and squeak into office with 49 percent of the vote.

Once he got into office, Renzi sold his remaining interest in the company to Sandlin, earning somewhere between $1 million and $5 million, according to public disclosure forms.

And that's why it seems like more than a coincidence that, last October, Renzi publicly announced that he'd be proposing legislation that would include Sandlin's acreage in a land swap. Sandlin sold the acreage to a group of experienced swappers a week later, records show, for what appears to be considerably more than he paid for it, though he insists he could have gotten more.

Initially, Renzi's chief of staff, Brian Murray, told New Times that Renzi didn't know that the land belonged to Sandlin. Then he said that Sandlin sold the property before Renzi got involved with the swap, a claim that's contradicted by the sale date.

But when Renzi himself got on the phone, he admitted that he knew all along that the investors proposing the swap were dealing with Sandlin. While he insisted, vehemently, that he'd done nothing wrong, Renzi admitted that he recused himself from the legislation after hearing that a lobbyist had complained about Sandlin's connection.

"I did not want any appearance of impropriety," Renzi says.

After Rick Renzi's 2002 campaign, the Federal Elections Commission found enough problems to order a full audit of the new congressman's campaign coffers.

And the audit, released in 2004, found plenty of cause for concern.

For example, Renzi's campaign overstated its cash on hand by close to $64,000. Renzi also failed to list employers or occupations for 200 contributors, as the law requires.

Worst of all, the campaign used $369,000 of loans from "corporate funds." Corporate donations are illegal, and while Renzi insisted that the money came from his personal accounts, the audit concluded that the transactions were nevertheless "impermissible."

While the audit doesn't mention James Sandlin, records from the Arizona Secretary of State make it clear that he was, at minimum, peripherally involved in the corporate transactions that gave Renzi an extra cash boost.

Sandlin, a real estate investor with extensive holdings in Texas and Arizona, says he didn't meet Renzi until around 2001. At that point, Sandlin says, a family member suggested he buy into a venture that Renzi was involved with in Kingman.

A Virginia-based insurance executive, Renzi and his wife had started an Arizona real estate investment company in 1995. (While he grew up in Arizona, Renzi didn't buy a home in Flagstaff until 2001.)

At the time Sandlin met the Renzis, the Renzis had full ownership of the company. But while Renzi touted the business in his campaign biography, he now says that at the time he met Sandlin, its only holding was some undeveloped land in Kingman.

In October 2001, Sandlin gave them $200,000 cash for a half-interest in the company.

What happens next is wildly complicated. As detailed in the FEC audit, Renzi made a series of transfers and loans involving the money from the October 2001 sale, a second family-owned company, and his campaign.

The end result, though, is that Renzi put all $200,000 from the sale to Sandlin into his campaign coffers. Along with another $236,000 from his own pocket, according to the Center for Responsive Politics, Renzi was able to gain name recognition in a crowded field.

Renzi won the Republican primary. Then he narrowly beat Democrat George Cordova in November 2002.

The Federal Elections Commission said that the loans from Renzi's businesses to himself and then to his campaign were "impermissible," and that Renzi's use of the money amounted to using corporate funds. The commission, however, closed its file on the matter this year without taking action.

An FEC spokesman said he was not permitted to comment on the investigation.